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For Realtors, spring has sprung

By Dan O'Brien, dobrien@lowellsun.com

Updated:
01/27/2013 07:00:05 AM EST

Real-estate pros have a little more spring in their step as they enter 2013, and the news this past week from the Northeast Association of Realtors explains why: After a long and grinding decline, home sales in the Merrimack Valley are at their highest levels in at least five years.

A couple of added bonuses, one for would-be sellers and the other for prospective buyers: Prices appear to finally be reversing their multiyear decline, while interest rates remain near historically low levels.

"A lot of people have been wondering when we were going to hit bottom," said Timothy Warren Jr., chief executive officer for The Warren Group, a Boston-based publisher of banking and real-estate data. "Well, it appears 2011 was bottom. In 2012, we had 12 straight months of gains in sales.

"So it's year one of the recovery."

For a 15-community region along I-495 extending from Boxford in the North to Littleton in the South, there were 3,207 single-family homes sold in 2012, according to NEAR. That's 23.3 percent higher than 2011, and the most for any year since 3,771 were sold in 2005.

"There's definitely a lot of activity, with interest rates so low," said Richard Howe Jr., register of deeds for the Middlesex North Registry of Deeds in Lowell, during an interview earlier this month. "The 2012 numbers are positive but your eyes and ears tell you that it might not be as optimistic.

"I don't know which is correct.

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Condominium sales in the aforementioned 15-community region also jumped more than 20 percent, from 964 in 2011 to 1,172 last year, according to NEAR. The 2012 figure was the most since 2007.

The median price for a single-family home sold in the Merrimack Valley last year was $309,900, up 3.3 percent from 2011. Before last year, the median home price in the region had declined in five of the past six years, and was off more than 20 percent from the 2005 peak of $372,900.

The median condo price in the region slipped 2.9 percent, however, to $170,000.

"Sellers are getting about 98 or 99 percent of their asking price," said Christina Lazrak, an award-winning Realtor from Chelmsford-based RE/MAX Prestige. "If a home is priced appropriately, it sells."

Warren credited the sales rebound to a steadily improving economy.

"Real estate needs to be in tune with two things," he said. "One is personal income. Are there jobs or no jobs? Are people earning bonuses, getting overtime or able to secure a second job? Obviously, real estate can't be successful if people can't afford it.

"Second, the relationship between rentals and real-estate prices. What we saw in 2006 was that apartments became more attractive, and in some cases were the only option for people. But that market got tighter, rents went up and with interest rates going way down, it got out of whack. It eventually made more sense to own."

In November, the average 30-year mortgage rate reached an all-time low of 3.31 percent, according to national mortgage buyer Freddie Mac. Last week it had bumped up only slightly, to 3.42 percent.

"How much lower can they go?" asked Lazrak with a laugh. She recalled a recent sale where the buyer -- through some kind of special government program -- was able to secure a fixed, 30-year mortgage of 2.125 percent.

Realtors say the big story going forward -- something that could continue to push prices up in the near term -- is the lack of inventory. NEAR reported that as of Jan. 15, just 904 single-family homes were on the market in the Merrimack Valley.

That's the fewest for the region in at least 10 years, officials said, adding that during the market's fever pitch in 2006-07 they reached 2,242 single-family homes and 1,251 condominiums.

"We are hearing that sellers are waiting for the spring market to offer their properties for sale, but the buyers are out looking now," said NEAR President Chris Doherty, a Realtor at Prudential Howe & Doherty Realtors in Andover, in a press release.

"The inventory levels are very low -- for the moment. Interest rates are very low -- at the moment. And there's a lot of pent-up demand -- at the moment," said Lazrak. "This is creating a more balanced market where neither the buyer nor the seller has a hold over the other."

"People are getting fair market value. There are no huge deals out there."

A big reason for the price declines of recent years was the deluge of foreclosures, many from people who bought near the market's peak only to not be able to afford their mortgages.

But as The Warren Group recently reported, foreclosure deeds declined for a sixth straight month in November (December and year-end figures are not yet available) and petitions to foreclose -- the first step in the process -- reached their lowest level of the year in November.

"We're certainly not out of the woods, but I don't see them increasing here," said Warren.

Howe agreed, even though the city had seen a small uptick in petitions midway through December. He said he expected to see "steady progress" because "legally, there aren't any bombshell cases."

Lazrak said Congress' recent decision to extend the Mortgage Debt Relief Act, which allows troubled homeowners to execute "short sales" -- where homes are sold for less than what is owed on their corresponding mortgaged -- without being required to pay taxes on the forgiven debt, will also help tame foreclosures.

"We're working to have more people put their homes on the market, rather than losing their homes," she said.

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